Asset protection in the modern world can refer to many different contexts: minimizing the cost and tax consequences of an estate, preventing creditors from taking your assets to satisfy commercial debts or personal injury judgments, preventing a bankruptcy trustee from taking your assets to help satisfy your creditors, even preventing separate assets from being treated as community property when a marriage ends in divorce. While the contexts and the laws that apply to those contexts differ, the goal is the same: for you to remain in control of property that someone else may try to claim. For this reason, speaking with a knowledgeable Sun City asset protection lawyer is in your best interest.
Unfortunately that also necessarily means that your desire to protect an asset is matched by the desire of the potential claimants to reach that asset. If the strategy employed to protect the asset is not implemented in full compliance with the law, the claimant will find and exploit the defect. That, essentially, is the asset protection battle. Your primary asset in that battle is the help of professionals experienced in all the legal areas that come into play: estates, trusts, business structures, real property, taxes, and more. You will find these legal professionals at Gorman & Jones, PLC in Sun City, AZ.
Asset protection plans are a good idea as soon as you have enough assets to justify the effort and cost of developing the plan. To some degree, that depends on the kinds of assets you have: if a family business is by far the largest asset in your life, for example, you want to make sure that the business is protected. It also depends to some extent on how likely you are to be the subject of substantial claims against you. How much debt are you responsible for, for example, and do your business activities carry a high risk of personal injury claims against you? In the realm of community property, of course, you will ideally begin planning before the marriage and continue updating as your assets and circumstances change.
Once a claim against you arises, transferring assets from one person to another, or from one form of ownership to another, won’t avoid the claim. In fact, you’d likely be hit with a charge of fraud. Sooner, not later, is the time to contact an experienced Sun City estate planning lawyer to perform a thorough analysis of your holdings and to develop a comprehensive plan to shield them from potential claims.
The simplest form of protection against creditors is for the asset to be specifically exempted from creditors by state or federal law. Arizona exempts certain assets from the claims of creditors. Examples include life insurance proceeds and a portion of the value of your home. Even these specific exemptions have technical requirements and may not make the asset exempt from all claims.
There are also some federal exemptions, applicable to federal benefits like Social Security and veterans’ benefits. Again, the protection does not extend to every type of claim and you may wish to consult a Sun City asset protection lawyer for clarification.
In addition to both closely held and publicly traded corporations, there are now many different kinds of business structures that provide protection from personal liability, including:
LLCs can be structured very narrowly so that a single business ends up consisting of a few different LLCs, each performing a limited portion of the activities. On the other hand, the more complicated the setup, the more it looks like the structure exists solely to avoid claims, making courts more willing to look beyond the surface structure in order to treat claimants fairly.
Numerous other tools exist to help protect assets. The simplest is liability insurance with policy limits appropriate to the risk involved. As long as a personal injury claim is for less than the policy limits (and the policy covers the injury), there is no danger to the asset.
A detailed plan for identifying separate and community property and for tracking each type as assets move into and out of a marriage can protect assets in a divorce.
A wide variety of trusts can shield assets from numerous claims, as long as they are structured carefully and comply with all legal requirements.
At Gorman & Jones, PLC, we practice law exclusively in the field of trusts, estates, probate, and related tax issues. Our lawyers have over 25 years of combined experience in these fields, providing effective legal advice. Whether you want to update an existing asset protection plan – always a good idea, since the relevant laws change frequently – or are just thinking about creating one, contact us today.
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